Terms and Obligations in a Contract

¶ … law approach to contract formation and contract terms is that an acceptance should be based on the actual terms of the proposed offer. This is primarily because an acceptance is a binding agreement that must be unconditional, absolute and identical to the proposed offer's terms. In light of this factor, an expression of acceptance must be definite, seasonable, and given within a suitable timeframe.

While not all responses to a proposed offer function as acceptances, the expression of acceptance must sufficiently respond to the offer and provide indications of intentions to enter into an agreement with the other party. In Step-Saver's case, there are several expressions of acceptance that occurred every time the company sent a purchase order to purchase twenty copies of Multilink Advanced Program from The Software Link, Inc. (TSL).

By sending the purchase order, Step-Saver was essentially sending an expression of acceptance for the purchase of the specific batch of the program. The court rejected TSL's argument that the box-top was a conditional acceptance because under UCC §2-207 (1), the purchase order from Step-Saver was a written confirmation that acted as an acceptance even if additional or different terms were part of the contract.

Even though there were additional or different terms than those agreed upon between these two parties, TSL did not clearly state unwillingness to continue with the transactions unless these terms were included in the contract as required by UCC §2-207 (1). Since TSL failed to state this, the box-top could not be regarded as conditional acceptance (Phillips, 2009). As a result, the court classified the box-top as additional terms to the contract based on Section 2-207 (2).

The box-top license would essentially be proposals for addition to the agreement/contract as stipulated in this section. Moreover, box top licensing could not be considered as conditional acceptance simply by opening the package containing the Multilink Advanced Program. The Software Link, Inc. (TSL) did not expressly state that it would not carry out any transactions with Step-Saver if they latter did not consent to the new terms. Step-Saver's repeated opening of deals made did not necessarily demonstrate acceptance of the contract/agreement.

Additionally, the warranty disclaimer and limitation of remedies provisions were considered as material alterations under subsection 2 of UCC because they were proposals for addition to the contract that needed to be agreed upon between the two parties. Similar to the box-top license, the inclusion of these terms would be tantamount to written confirmation incorporating additional terms, which would in turn amount to material alterations.

Subsection 2 of the Uniform Confirmation Code (UCC) requires written confirmations of additional term to the original agreement be agreed upon between the two parties in order for them to be binding. When the initial contract or agreement was made, Step-Saver and The Software Link, Inc. did not incorporate a disclaimer. The introduction of the warranty disclaimer and limitation of remedies provisions would mean that new terms were being introduced.

These news terms would materially alter the initial agreement and would need to be agreed upon as required subsection 2 of the Uniform Confirmation Code. Based on these provisions, the court considered these terms as material alterations since they were not part of the initial agreement and needed to be agreed upon by the two parties in order to be legally binding. The provisions were also regarded as material alterations because they did not become part of this contract and could not be enforced.

The two parties failed to agree on these provisions since Step-Saver refused to sign the disclaimer and limitation of damages provisions. This was despite of the numerous attempts by TSL to gain express consent to these terms. Note 1 -- Part B Since Step-Saver Data Systems, Inc. v. Wyse Technology case, there have several cases on contract terms and obligations that have been heard and determined by courts. An example of such cases is ProCD, Inc. v. Zeidenberg that was decided by the U.S.

Court of Appeals for the Seventh Circuit five years after Step-Saver case (Phillips, 2009). The decision in this case was very different from the one reached in Step-Saver's case and had a different outcome regarding contract formation. Actually, the decision in this case triggered a "battle of the forms" analysis because the court held that Step-Saver involved two forms. A battle of the forms is a scenario that occurs when two parties to a contract exchange several documents during negotiations for a transaction.

The exchange of multiple documents is usually geared towards reaching an agreement or contract. In a battle of forms, the documents provided by one party tend to have different proposed terms as compared to those provided by the other party. During this battle, the main issue of concern is which documents or terms will govern the contract. This appears to be the case in Step-Save since the two parties provided slightly different documents are battled to determine whose terms would govern the contract.

Subsection 2-207 the Uniform Confirmation Code appears to require two forms, which involves an offer and expression of acceptance/counter offer. This subsection seemingly requires two forms by overruling the mirror image rule and last shot rule. In this case, if parties exchange writings showing their intentions to enter into an agreement/contract, the differences in standard terms won't prevent them from entering into a contract (Rogers, 2012).

While the first writing is a proposed offer, the second one is regarded as an expression of acceptance even if it incorporates different/additional terms. Shrink-wrap licenses are efficient means through which the terms of each sale of a product are provided or dictated by the vendor. These licenses are in most cases similar to box top licenses, especially in relation to software products. Similar to box top licenses, a customer is considered to have assented to the terms when he/she opens and utilizes the product.

In light of Dorton's case, box-top license is not different from shrink-wrap terms since opening the product is regarded as acceptance of the terms (Morrill, 2008). The court ruling in ProCD case distinguished itself from Step-Saver on the premise that the latter involved two forms and was not a consumer transaction. The rules of contract formation vary depending on whether a transaction is commercial or consumer in nature. The difference comes from whether the consumer is aware.